Police have told cafes, hotels and other businesses in central Beijing to install surveillance technology for Wi-Fi users or face fines and possible closure, in a further tightening of internet controls.

China has the world's largest and most sophisticated web censorship and monitoring system, which it has tightened still further after the Middle Eastern uprisings. Measures included blocking major virtual private networks, which allow people to evade internet controls.

The new software, which costs about 20,000 yuan (£1,900), allows officials to check the identities of users and monitor their activity. Businesses that fail to comply face a fine of the same size and could have their licences revoked.

Strict controls already apply at internet cafes, which poorer people rely on for access.

It is unclear how strictly the measures will be enforced, and it appears that only Dongcheng district has told owners of the regulations. A staff member at its internet security unit said the initiative was city-wide, but Beijing police headquarters had not responded to a faxed query at time of writing.

The Dongcheng police officer added: "This regulation is made to enhance internet security and to assist public security bureaux to break criminal cases. Details of implementation are confidential."

"This is undoubtedly an invasion of Wi-Fi users' privacy," said Jason Chen, a 22-year-old Beijing resident.

"We have already felt the restriction on university campuses, since they have always been monitored. But this time, the control is stretching to cafes and people's feeling of violation is sharper. If cafes cancel their Wi-Fi I will care a lot, and I believe young people will react strongly."

Some venues in Dongcheng complained they were already losing custom after cutting off Wi-Fi.

"It is just unbelievable. Customers are not happy either," said Leona Zhang, manager of the Contempio bar.

"Some owners simply think this is for the public security bureaux to make money from us. The charge is the same regardless of size, even for small ones with only two or three tables."

Businesses in other parts of Beijing said they had not heard of the measure.

"If the regulation was implemented here, it would struggle to be accepted. The cost is too high," said a worker at the New Seven Day Bar in Haidian.